The move will avoid any need for the Queen to break the deadlock, which left the country with two Prime Ministers, two governors-general, two cabinets and two police commissioners.

The Queen's envoy for Papua New Guinea, Sir Michael Ogio, has declared that his reinstatement of Sir Michael Somare last week – which threw the Pacific nation into chaos – was "wrong and invalid". Amid the turmoil, the governor-general's position was itself thrown into doubt when Mr O'Neill and the Parliament appointed a rival governor-general.

Sir Michael Ogio has now reversed his decision, saying he had not realised that Mr O'Neill had been backed by Parliament.

"As representative of the queen and head of state, I have reconsidered my earlier decision based on advice given me," he said.

"My conclusion to swear in the Sir Michael government in law was wrong and invalid. The advice I received was flawed and I did not take into account Parliament's decision to remove Sir Michael on December 9 this year. I recognise the election of Peter O'Neill as Prime Minister. I confirm he was sworn in legally and correctly."

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The Parliament in turn rescinded its decision to suspend Sir Michael Ogio, who called for "the business of the nation to resume".

The initial decision to reinstate Sir Michael last week followed a ruling by the country's Supreme Court that his resignation in August while he was seeking medical treatment abroad was invalid. Sir Michael and Mr O'Neill, both calling themselves prime minister, then set up separate camps and drew in loyal police contingents.

Despite Sir Michael Ogio's reinstatement of Mr O'Neill, Sir Michael, 75, the so-called grand chief and a veteran of PNG politics, continued to insist that he is the rightful leader.

But the nation's public service, army and police chiefs have all said they recognise the O'Neill government.